Jack Peat argues that rail franchise needs competition, not monopolies.
By Jack Peat
Two player Monopoly never quite works. We’ve all tried it, but the fact is that until you inject a little healthy competition, the game becomes a redundant pastime. As the east coast main line goes up for franchise once again, a new piece of government research has revealed that playing monopoly with the UK’s spinal train route has stifled innovation, impacted customer satisfaction and substantially inflated prices. If we are to see this trend reversed, ‘Railopolies’ must be granted open access with more players actively encouraged to take part to avoid the market becoming a rather lonely place.
We have all become rather attuned to a sole operator of franchised lines, but this wasn’t the system envisaged 20 years ago, nor is it healthy for Britain’s rail industry. When the notion of a privatised railway was first tabled politicians envisaged hundreds of railway companies operating routes throughout the country, but what eventuated was only a handful of large players bidding for franchises to operate rail services over a fixed time table. The lack of competition means that prices have gone up without the returns on investment to justify them, impacting customer service and the overall quality of our railways.
Bidding for the east coast franchise – one of the most lucrative lines in the country – is soon to get underway with politicians hoping to avoid the mire of the National Express fiasco. A monopolised cash cow was too big a lure for the traditionally coach-based company, and who can blame them – competition on the line was scarce and passenger numbers were increasing. But too little was promised for too much, and an over-egged deal led to the collapse of the deal and a bank-esque bailout by the government. To restore any semblance of balance on the the route of the Flying Scotsman, we must allow more competition to flourish.
New research by Tony Lodge for the Centre for Policy studies has provided compelling evidence that de-monopolisation of the east coast main line can substantially improve the quality of its offerings. In the same way Ryanair and EasyJet disrupted the traditionally BA and Aer Lingus aviation markets, companies such as Grand Central and Hull Trains are increasing competition on the east coast.
According to the study, stations that enjoy competition, such as Doncaster, York, Northallerton and Grantham, have seen passenger increase by 42 per cent, compared with 27 per cent for those without competition, such as Leeds. What’s more, there has been a smaller increase in average fares at stations with competition since 2009, whereas stations such as monopolised Edinburgh have seen prices soar.
“If you look at the 1992 White Paper for rail privatisation, its ambitions have been betrayed,” Mr Lodge argues. “I’ve spoken to some senior people in the Conservative Party who consider the Department for Transport a ‘failed organisation’ – it needs to be broken up or given a real jolt.”
Allowing more players to participate on our monopolised railway board will mean that – as passenger numbers double in size by 2030 – the UK remains positively interconnected. State-sponsored rail operator monopolies, or ‘railopolies’, must be replaced by ‘open access’ networks allowing rival train operators to run services on the same track on which franchises work. As Tim O’Toole and Richard Branson get increasingly bored of playing a two man monopoly game, a welcome boost for all can be injected by adding more players to the market and allowing them to compete.